Sep 26, 2017 Last Updated 8:08 AM, Sep 25, 2017

Battle for power

Australian, Japanese firms fight over deposits

THIS year marks the 70th year of the end of the war in the Solomons. Yet the battle over natural resources in these islands ended in the courts just months ago and there were no winners.

In fact the biggest loser has been the Solomon Islands in terms of lost opportunities for investment and job creation. The Australian media has tried to portray this as an epic David versus Goliath battle. In this case a small Australian mining company has been stripped of its rights to one of the Pacific’s biggest greenfield nickel laterite deposits, after a decision by the Solomon Islands Court of Appeal.

ASX-listed Axiom Mining has battled long and hard with the Japanese giant, Sumitomo Metal Mining (SMM) Solomon Islands Limited for control of the deposit in Isabel Province. Three overseas judges of the Solomon Islands Court of Appeal quashed ministerial approval of Axiom’s prospecting licences, finding that the transfer of land registration to Axiom’s landowner partners had not been completed properly and so was invalid.

“It is a setback, but it is not a major or material setback from our point of view,” said Axiom Mining’s chief executive officer Ryan Mount. ‘Most important case’ on land since independence.”

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Cyanide risk

Closed Gold Ridge mine triggers concern

UNTIL April 2014, Gold Ridge was the sole operating mine in the Solomon Islands and contributing approximately 20 per cent to the nation’s Gross Domestic Product. But not all that glitter is gold. After the departure of the Australian Mining Company St Barbra – the mother company of Gold Ridge Mining Limited (GRML) – the risk of cyanide leak from the tailing dam has exacerbated by the day partly due to the recent spell of rainy weather.

When Tropical Cyclone Raquel hits Solomon in June, the Minister of Environment, Climate Change, Disaster Management and Meteorology Samuel Manetoali declared a “state of disaster” at the mine site situated 30 kilometres south-east of the capital Honiara. This followed threats of rising water from the tailings dam due to the heavy rain TC Raquel brought in. Controlled draining of the dam has been long overdue after GRML abandoned Gold Ridge last year and offered to sell it for a mere AU$100. Gold Ridge Community Investment Limited (GCIL) comprising landowners then purchased the mine and signed a ‘sale deed’ plus a ‘deed of indemnity’ in May 2015 with St Barbara.

St Barbara agreed to fund on behalf of GRML the manufacture, delivery and installation of a replacement water treatment plant at a cost of approximately AU$1 million. St Barbara also agreed to provide technical advice and assistance to GCIL for a period of six months following the sale.

Questions still remain however on just how St Barbara could abandon the mine then offered to sell it for a mere $100. Policy Secretary for Resources Sector in the Prime Minister’s Office, Chris Vehe revealed to Islands Business the total ore reserve at Gold Ridge could be used up in three years if current processing plant capacity is re-engaged by a new investor. “On top of that gold deposits in Gold Ridge are of low grade when compared to other world class deposits in other parts of the globe. 

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Scientists say both can operate side by side

As interest in deep sea mining grows, one question that comes up time and time again is what impact would deep sea mining have on fisheries? Deep sea mining is a new industry as opposed to fisheries, which has long been a leading source of government income, exports, jobs and food security. So naturally people want healthy fisheries more than any new and potentially risky, extractive industry to go ahead. But do you have to decide between one or another? The answer seems to be no, according to experts. “It is not anything like a case of fish OR mining: both can easily operate side by side because mining at sea depths of 1500 to 5000 metres will not affect fishing near the surface waters.

Good management can allow both to coexist,” says Professor Mike Petterson, Director, Applied Geoscience and Technology Division of the SPC (Secretariat of the Pacific Community). Dr Malcolm Clark, Principal Scientist at New Zealand’s National Institute of Water and Atmospheric Research (NIWA) explains in more detail: “The main Pacific fisheries are pelagic, with skipjack, bigeye, yellowfin and albacore tuna extending to depths of about 300 metres. “Deep snappers are found closer to the seafloor, to depths of about 400 metres. Other deep sea commercial species such as alfonsino and bluenose can go deeper still, to 700 metres.

“The main potential seabed mineral resources in the western Pacific occur deeper than these fisheries: seafloor massive sulphides at 1000 metres and deeper, and manganese nodules at around 4000 metres. “Many of the most damaging impacts of seabed mining (the physical disruption and dense sediment plumes generated) will occur at the seafloor, and in most cases this will be too deep to directly affect Pacific Islands fisheries.”

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Sea-bed mining

Pacific islands are set to become the global frontier for a new industry—the mining of minerals from the seabed. The industry carries plenty of potential for controversy, for reasons that should be obvious to anyone familiar with mining on land, in our region and elsewhere. How much of the proceeds will flow to the people of the Pacific? How will the industry affect communities? How many local people will be employed, and on what grade of job, with what working conditions? What will be the impact on nature?

Who will really be in control? Pacific islands governments have been discussing and debating these questions for several years, and we have some proposed answers in the form of the Secretariat of the Pacific Community’s Regional Legislative and Regulatory Framework. Even so, the concerns I raised above are very real. They are, for example, causing significant delay to the Solwara 1 project in Papua New Guinea.

This indicates that mining companies as well as governments need to take the peoples’ issues seriously. If they do not, operations will be disrupted and perhaps even cancelled. Last month, at the kind invitation of Minister Anthony Lecren of New Caledonia, I had the honour of discussing these issues with representatives of other Pacific states and territories at the Oceania21 environment meeting.

I outlined what I see as the issues and challenges facing Pacific islands as we address this new frontier. And I was struck by the level of concern, both for local communities and for the environment. But I was also struck by the potential of the industry to help our islands, if it is done properly. Prices for copper, silver and palladium rose fivefold between 2004 and 2011; if the right deals are struck with companies mining these minerals from our seabed, some of these high prices can benefit our people.

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While PNG made news for being the first country in the world to issue a licence for deep-sea mining, more and more Pacific Islands countries are getting approaches from companies interested in exploration and exploitation of deepsea minerals. The questions that arise are—what are the risks? What are the benefits? What do Pacific Islanders need to know to make the right decisions here? Many islanders have learnt, the hard way, the consequences of not knowing what they were getting into with mining and unsustainable development—phosphate mining on Nauru perhaps being the most dramatic example of a mining boom…and then a bust. Is deep-sea mining different? Time is critical, says Dr Jimmie Rodgers, Director-General, Secretariat of the Pacific Community (SPC): “Is it urgent? Is it important now? Yes! Because multinationals are not going to wait to give Pacific Islands countries time to look at all the studies, environmental analysis, before they come in—they push in.” Over 300 exploration licences have been granted in Pacific Islands countries like Solomon Islands, Vanuatu and Tonga. It seems deep-sea mining promises riches and risks. In the Pacific, most of the mineral deposits considered profitable to mine are known as Seafloor Massive Sulphides (SMS).

Some countries have manganese nodules and cobalt-rich crusts on the seafloor, mining of which are likely to have greater environmental impacts than SMS. For instance, nodules, small lumpy concretions that form over millions of years as metals from the seawater and seafloor sediments precipitate around a core, which may be a shark tooth or rock fragment. Nodules cover a significant area of the sea floor and contain minerals such as manganese, copper, nickel and cobalt.

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